The proposed charges mean those who take out new loans face paying thousands of pounds more for care.

The interest bill will continue to grow until the family home has been sold, even after the person has died.

Liz Kendall, Labour’s shadow care minister who discovered the “hidden” interest rate charges via a Parliamentary question, said: “These charges will come as a huge shock to elderly people and their families. Ministers have repeatedly claimed care costs will be capped at £72,000 but the truth is elderly people will have to pay far more.

The initiative aims to reduce the number of people forced to sell their homes but interest is high [GETTY]

These charges will come as a huge shock to elderly

Liz Kendall

“These new interest charges won’t be included in the so-called cap on care costs, and will continue to clock up if people can’t sell the family home once a loved one has died.

“Elderly people deserve to be told the truth about how much they will really have to pay.”

However Government sources hit back at Labour’s “hypocrisy” yesterday, saying: “It’s a bit rich for Ms Kendall to criticise this idea when her party first proposed it in their own Impact Assessment in 2010... This is rank hypocrisy.”

A Department of Health spokesman said the charges “have been part of an open consultation with the public”.